Physicians should expect higher scrutiny on Medicare claims involving Evaluation and Management (“E/M”) services

Inspector General Daniel R. Levinson with the Office of the Inspector General (“OIG”) recently issued a startling report explaining that Medicare inappropriately paid $6.7 billion for claims for E/M Services in 2010. These astronomical overpayments were the result of E/M services that were incorrectly coded or lacked documentation — and they represent 21% of Medicare payments for E/M services in 2010. 

Read the full OIG report here »

The OIG based its study on a medical record review of a random sample of Part B claims for E/M services from 2010. Specifically, a group of certified professional coders reviewed a random sample of 2010 Part B claims for E/M services to determine whether documented E/M services were correctly coded and sufficiently documented. The analysis was limited to physicians who had claims for 100 or more E/M services in 2010 and the sampling frame consisted of 369,629,103 claims for E/M services, which amounted to $32.3 billion in Medicare payments. The claims surveyed were grouped into two strata: “high-coding” physicians, consistently found to bill at high level codes for E/M services, (making up 826,646 claims), as well as physicians who did not meet the classification as “high-coding” physicians (representing 368,8000,457 claims).

What were the causes?

The two main causes of Medicare’s inappropriate payment of 2010 claims for E/M services were incorrect coding and insufficient documentation. The OIG reports that 42% of claims for 2010 E/M services were incorrectly coded. This percentage accounts for both upcoding and downcoding. In addition, the OIG reported that 19% of the E/M services claims lacked proper documentation.

CMS split on OIG’s recommendations

As a result of this report, the OIG made the following recommendations to the Centers for Medicare and Medicaid Services (“CMS”).

  1. Educate physicians on coding and documentation requirements for E/M services;
  2. Continue to encourage contractors to review E/M services billed for by high-coding physicians; and
  3. Follow up on claims for E/M services that were paid for in error.

CMS agreed with the OIG’s first recommendation; disagreed with the second recommendation; and agreed, in part, with the OIG’s third recommendation.

Physicians should review all claims for E/M services for accuracy, including correct coding and sufficient documentation. All E/M claims must be “medically reasonable and necessary,” and must meet the individual requirements of the CPT codes that are used on the claims. To ensure compliance with Medicare billing requirements, physicians should take into account: patient history, physical examination, medical decision making, counseling, coordination of care, the nature of the patient’s presenting issue, and time.